Rates, Fees, & Market Trends For Business Bank Accounts In 2017

Using the latest data from our 2017 Business Savings and Transaction Account research and ratings, Canstar looks at the fees, interest rates, and other market trends on offer for business owners this year.

Business account interest rates

The good news is that businesses overall have more money in the bank this year than last year. The latest RBA statistics show that businesses had $403 billion in deposits in December 2016 compared to $365 billion in December 2015.

But a survey of 500 SME business owners by Suncorp released in June 2017 showed that more than two thirds of business owners have experienced challenges such as financial stress. So how do you make sure that your profits continue to grow by earning interest?

Canstar’s Research team found this year that as expected, interest rates have dropped slightly year-on-year since our last ratings season, thanks, in part, to the last RBA cash rate cut in August 2016.

With interest rates quite low, it’s important to shop around for the highest base rates you can find. As you can see from the table below, accounts with a Canstar 5-star rating have significantly higher interest rates than the rest of the market:

It’s worth looking for a transaction fee-free account if you can, since the average fees can add up over time, especially for the accounts with some of the higher fees on the market. The following business transaction and savings accounts offer unlimited free transactions for the majority of common transaction types:

*For the NAB Business Everyday Account, there is a $0/month account-keeping fee for access to unlimited electronic transactions, or a $10/month account-keeping fee applies to also have access to unlimited cheque transactions and branch visits.

The table below shows 5-star rated business transaction accounts available for businesses that make fewer transactions, sorted by company name:

Could your business save money by going digital?

It certainly depends on your business needs and financial situation, but the fact is that a lot of businesses are going digital, making more electronic transactions.

The past year has seen a significant shift in the way customers make payments, with digital wallets becoming more prevalent. But businesses are also moving towards making their payments and other transactions via mobile banking or online banking.

MYOB’s December 2016 Business Monitor survey found an increasing number of businesses conduct almost all of their banking online:

66% of businesses use online banking

28% accept instant payments (e.g. EFTPOS, Apple Pay, PayPal, etc.)

32% do accounting and bookkeeping online

Canstar’s research has found that doing the business banking online can result in paying fewer fees. Many accounts we rated in 2017 offer unlimited free electronic transactions (e.g. online transfers, eftpos, direct debits, etc.), only charging for cheques and/or branch transactions. See above for our list of accounts with unlimited free transactions.

Apart from business banking methods, getting a business online via a website or social media can also really help the bottom line, according to MYOB’s latest survey:

Increased sales: Around 1 in 4 businesses reported an increase in revenue and income from having a website (28%) or social media (24%).

Increased customer base: Nearly half of all businesses saying that having either a website (46%) or social media presence (43%) generated more customer enquiries and leads.

Increased sales in the pipeline: 50% of businesses with a social media presence and 47% of businesses with a website reported that they had more work or sales lined up for the March 2017 quarter.

With these stats in mind, it’s not surprising that more than 1 in 4 businesses (26%) said they intend to focus over the next 12 months on sales of their products and services online, compared to 22% last year.

Another 1 in 5 business operators (22%) said they intend to increase investment in online marketing and advertising.

This was seen as being most important for start-ups, with 37% of start-ups planning to increase investment in selling products and services online and 28% planning to increase their online marketing.

Social media remains an area where there is a significant gap for businesses to fill – only 47% of SMEs have a social media presence, but 79% of consumers use social media regularly, according to the 2017 Sensis Social Media report.

56% of consumers pay attention to ads they see on social media (Sensis, 2017).

Social media advertising is therefore becoming more important, with 26% of small businesses and 35% of medium-sized businesses now using social media advertising in 2017, a solid increase from last year (20% and 27% respectively).

Late payments impacting Australian businesses

Late payments have been impacting businesses across the country, to the point where the Australian Small Business and Family Enterprise Ombudsman called for legislation to regulate payment times to small businesses.

In April 2017, the Ombudsman released findings showing that almost half of all small businesses in Australia have more than $20,000 owing to them from late payments, and 14% have more than $100,000 owed to them.

In total, small businesses in Australia had $26 million in unpaid invoices owed to them. This is obviously concerning, given that Ombudsman statistics show 90% of small business failures are due to poor cashflow.

An international study has shown that Australia is lagging behind the rest of the world when it comes to paying businesses on time. Australian businesses in the survey were paid on average 26.4 days late, compared to the next ‘slowest’ countries, Mexico (18.6 days late) and South Africa (16.5 days late).

The main culprits for paying late in Australia are large and multi-national businesses. Research by the RFI showed mid-size Australian businesses owe $8 billion in outstanding payments to suppliers, with more than $2 billion currently overdue.

Ombudsman Carnell says this trend of not repaying debts on time means suppliers are effectively using other businesses as a cheap form of finance.

“Small businesses should never have to act as a bank for big businesses, helping to finance multinational companies,” said Carnell.

The Ombudsman is calling for legislation that would set a maximum payment time for business-to-business transactions of 15 days from July 2018 onwards.

Source: Australian Small Business and Family Enterprise Ombudsman

Until then, businesses may benefit from setting aside profits in a high interest earning savings account, for use in times when invoices are slow in arriving. Canstar can help you there, comparing business savings accounts available in Australia:

This advice is general and has not taken into account your objectives, financial situation, or needs. Consider whether this advice is right for you. Consider the product disclosure statement (PDS) before making any financial decision. For more information, read Canstar’s Financial Services Guide (FSG).

Canstar is an information provider and in giving you product information Canstar is not making any suggestion or recommendation about a particular product. If you decided to apply for a product, you will deal directly with a financial product provider, and not with Canstar. Cost and product information should be confirmed with the relevant product provider. For more information, read the product disclosure statement (PDS), Canstar’s Financial Services Guide (FSG), detailed disclosure, important notes and liability disclaimer.

The benefits or inclusions mentioned represent a selection of what is covered at the time of writing. Additional terms and conditions may apply to different features. Additional fees may apply to the product. Please ensure that you read the product disclosure statement (PDS) to determine all the current options and inclusions for the product you are considering.

CANSTAR is an information provider and in giving you product information CANSTAR is not making any suggestion or recommendation about a particular product. If you decided to apply for a savings account, you will deal directly with a financial institution, and not with CANSTAR. Rates and product information should be confirmed with the relevant financial institution. For more information, read our detailed disclosure, important notes and additional information.

The inclusions mentioned represent a selection of what is covered at the time of writing. Additional terms and conditions may apply to different features. Additional fees may apply to the product. CANSTAR is not making any suggestion or recommendation to you about this product. Please ensure that you read the product disclosure statement to determine all the current options and inclusions for the product you are considering.

Important Notes: The Star Ratings in this table were awarded in October 2016. The search results do not include all providers and may not compare all features relevant to you. View the CANSTAR Savings & Transaction Accounts Star Ratings Methodology. The rating shown is only one factor to take into account when considering products.

This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you. Consider the product disclosure statement before making a purchase decision. Canstar provides an information service. It is not a credit provider, and in giving you information about credit products Canstar is not making any suggestion or recommendation to you about a particular credit product. Statistics referenced on this page have been verified by Canstar Research. Research provided by Canstar Research AFSL and Australian Credit Licence No. 437917.